AGP Flags Rs. 885 Million Irregularities In SCO Data Center Project

The Auditor General of Pakistan (AGP) has flagged financial and procedural irregularities worth Rs. 885 million in the Ministry of Information Technology and Telecommunication’s Special Communications Organization (SCO) Data Center project, citing unauthorized changes to the approved scope of work and alleged overpayments.

According to the audit report, the Departmental Development Working Party (DDWP) approved the project, titled “Establishment of SCO Data Center for Providing Cloud Based Services in AJ&K and GB,” in May 2020 at an estimated cost of Rs. 770 million.

The project cost was later increased to Rs. 885 million in May 2024 through reappropriation of funds from other projects. However, auditors said the ministry did not obtain approval for a revised PC I despite significant changes in the project’s scope and expenditures.

The audit found that civil works exceeded the approved allocation by Rs. 40.71 million. It also noted that only one video wall was installed instead of the two approved under the PC I, while 14 air conditioning units were procured instead of the single unit originally approved, resulting in additional expenditure of Rs. 43.59 million. Similarly, two 500 KVA generators were purchased instead of one approved 150 KVA generator, adding Rs. 19.67 million in costs.

Auditors further observed that approved rectifiers and batteries were not procured, altering the project’s physical scope. They also alleged that although the number of servers was reduced from 30 to 15, software licenses were purchased for 30 servers, resulting in an overpayment of Rs. 12.65 million. In addition, professional services worth Rs. 58.27 million were reportedly overpaid despite the reduced server configuration.

The Ministry of IT defended the project, stating that the installed video wall functioned as a two in one system, while the additional cooling units and higher capacity generators were necessary to meet operational requirements.

It also maintained that although only 15 physical servers were installed, each server contained two CPU sockets, requiring 30 software licenses. The ministry further said professional services were paid only for 15 servers in accordance with the contract.

The Auditor General rejected the explanation, stating that the project scope and specifications had been changed without approval from the competent authority through a revised PC I. The audit also said the contract did not provide for dual socket servers and that payment records indicated software licensing and professional services for 30 servers.

The matter was reviewed by the Departmental Accounts Committee in December 2024, which directed the ministry to regularize the revised expenditure through the DDWP, recover any overpayments, and report compliance to the audit authorities.

The report noted that no progress had been communicated before its finalization and recommended strict implementation of the committee’s directives.